Inflation a concern, says Anant

Inflation a concern, says Anant

Hopeful November factory output would see a robust growth

Even as food inflation fell to below one per cent in mid-December, country’s Chief Statistician T C A Anant said the overall price rise still remains a concern, and the impact of economic slowdown may be gradually felt in employment numbers.

“There is still a concern on inflation, a concern which has also been expressed by the finance minister,” he told reporters at the release event of provisional results of the Annual Survey of Industries (ASI) 2009-10.

The slowdown in economic growth and industrial production may also impact the job situation in the country, he added. Anant, however, termed the country’s growth as “still robust” and said in the first half (April-September) the economy has expanded by 7.3 per cent. “But there are concerns on both the global and domestic fronts,” he added.

Asked if the negative growth in October IIP data could see a revision, he replied in the affirmative but added that it would not be hugely different from the original estimate. On complaints from various quarters including Reserve Bank over the inconsistency and volatility in IIP data, Anant said that the factory output numbers are based on quick estimates and with a fixed sample size.

“The IIP has a fixed index and a fixed set of entities are contacted, which means no new entities are included. Besides, IIP also mainly factors in large units which have a lesser rate of growth,” he said, adding that monthly industrial data across all countries in the world is volatile.

“So one needs to look at a longer term rather than comparing monthly figures. However, in the last 15 months, whichever way you look, there is a marked softening in industrial activity,” Anant said. A study is underway to compare the annual ASI figures and the IIP data as well as to look at the relationship between large units and small growth, he added.

He said he expected a positive growth rate in the industrial production index in November based on a rise in base effect and a robust growth in index of eight core industries. “It is possible you may see a positive growth rate in IIP next month. There are some indicators that point towards that, plust the core sector figures.”

India’s Index of eight core industries having a combined weight of 37.90 per cent in the IIP in November 2011 recorded a robust growth of 6.8 per cent backed by a stellar performance by cement, electricity and refinery products.

The expectation of growth in November output is also based on the fact that usually industrial production picks up in the festive season of October-November and lasts uptil March.

Then there is an year-end blip towards the end of March because of some accounting characteristics. According to Anant, there is also a belief that there will be a base effect rise this month compared to the same month last year. That will show positive growth.

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